General Ins. Co. of America v. Singleton
| Decision Date | 24 June 1974 |
| Citation | 115 Cal.Rptr. 291,40 Cal.App.3d 439 |
| Court | California Court of Appeals Court of Appeals |
| Parties | GENERAL INSURANCE COMPANY OF AMERICA, a corporation, Plaintiff and Respondent, v. Larry SINGLETON and Vonda Singleton, Defendants and Appellants. Civ. 33376. |
Knecht, Dingus & Boring, Larry D. Dingus, San Francisco, for plaintiff and respondent.
Frederick A. Cone, San Francisco, for respondents Brown.
Harvey Diemer, Palo Alto, for defendants and appellants.
Defendants and appellants Larry Singleton and Vonda Singleton appeal from the orders of the Alameda County Superior Court hereinafter described.
A prior judicial determination that plaintiff was liable to Colwell Company was not required before the court could order settlement with it from receivership assets.
This action arose out of the construction of a highrise building in Oakland. Plaintiff and respondent General Insurance Company of America filed a complaint for specific performance, for declaratory relief and for damages for breach of a written agreement of indemnity against appellants Singleton, defendant Merritt Building & Construction Company and others. Certain pleadings were filed by the defendants including a cross-complaint by defendants Fred L. Brown and Geneva Brown. Inasmuch as this appeal is concerned only with the issues between respondent and appellants, it is unnecessary to consider the issues as to the defendants other than appellants. After a trial the court made the orders hereinafter set forth from which appellants have appealed.
In 1965 defendants entered into a contract with T. H. Guy Company as owner, to construct a certain building. Plaintiff became the surety for defendants in connection with the construction project, executing a surety bond, naming Merritt Building & Construction Company and Singleton Corporation as principal, and both the owner and lender as obligees.
As inducement for plaintiff's execution of the surety bond, appellants who were stockholders, officers and directors of Singleton Company, one of the joint venturers of the contractor, together with the contractor and the other defendants, executed a written agreement to indemnify plaintiff for any loss under the surety bond. During the course of and following completion of the construction project, various disputes and controversies arose between the contractor, the owner, the lender and numerous unpaid materialmen and subcontractors, resulting in various lawsuits filed by such parties against both the contractor and plaintiff surety. The contractor became insolvent and a judgment in the sum of $205,841.46 was entered in one of the actions against the contractor and plaintiff. Plaintiff thereupon made demand upon appellants and the other signers of the indemnity agreement, for deposit of collateral security to protect it against loss under the bond, pursuant to the provisions of the indemnity agreement. As of that time plaintiff had a contingent exposure of loss under the bond in connection with eight separate claims in the aggregate amount of.$1,104,366.23, each of which was the subject of one or more pending lawsuits under the bond, filed by claimants against plaintiff.
These actions included a pending action by the lender (Colwell Company) for $500,000. It is the subject of the settlement with which we are concerned on this appeal. After deducting cash collateral security already held by plaintiff in the amount of $127,000, its demand upon the indemnitors, including appellants, was for deposit of $977,366.23. Not receiving an affirmative response to that demand, respondent brought this action. An interlocutory decree was entered, after a trial, in which the court held that plaintiff is entitled to specific performance of the indemnity agreement requiring the indemnitors to deposit collateral security sufficient to protect plaintiff against loss and that as the aggregate of plaintiff's exposure exceeds the aggregate of the disclosed assets of defendants, their assets should be immediately transferred to a receiver appointed by the court. The court reserved jurisdiction to facilitate administration of the receivership and to resolve matters connected with the litigation constituting the basis of plaintiff's contingent exposure to loss.
Settlement of the claims against some of the defendants followed. Plaintiff moved for an order authorizing settlement for $150,000 of the independent litigation instituted by the lender and that the receiver pay that sum to the lender out of the assets of the receivership. All of the parties, except appellants, stipulated to the granting of the motion. The court entered an order authorizing settlement which provided in pertinent part that plaintiff was authorized to enter into a settlement with lender (Colwell Company) whereby $150,000 should be paid it from the receivership estate in exchange for proper dismissals of the two actions brought by lender and a release of claims. The time of payment and the particular assets of the receivership to be used were to be determined by the court at a later fixed date. Appellants then filed a motion objecting to liquidation of receivership assets and for order staying liquidation of receivership assets and payment of settlement amount. At the hearing appellants' sole ground of objection was, as it is on this appeal, that there had not been a prior adjudication of appellants' liability to the lender. The motion was denied and after further argument, the court filed an order for sale and liquidation of sufficient receivership assets to consummate the $150,000 settlement. A still further hearing was had and a...
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